Abaxx Hires Paul Weiss, Demands Probe After Viceroy Short Attack
2h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
abaxx-technologiesviceroy-research
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Abaxx Technologies Inc. has retained the law firm Paul Weiss Rifkind Wharton & Garrison LLP and formally requested that Canadian securities regulators investigate potential manipulative trading in its shares. The company announced these decisive steps on 22 June 2026 in direct response to a short-selling campaign initiated by Viceroy Research, which published a critical report on 21 June 2026. The report alleged issues with the company's commodity exchange and clearinghouse ventures, triggering a significant sell-off in its stock.
Short seller attacks on growth-stage exchanges and fintech firms have intensified throughout 2026. High-profile campaigns against companies like Coinbase and MicroStrategy earlier this year resulted in similar double-digit single-day declines, highlighting market sensitivity to credibility challenges in this sector. The current macro environment of elevated interest rates has increased scrutiny on cash-burning technology companies, making them more vulnerable to short-term financing concerns raised by critics.
The catalyst for this event was the publication of Viceroy Research's report on Friday, 21 June 2026. The firm, known for its aggressive short positions and detailed forensic accounting, alleged that Abaxx's valuation was disconnected from the commercial viability of its nascent exchange platform. This triggered an immediate negative reaction in the stock, prompting Abaxx's management to respond within 24 hours with legal counsel and a call for regulatory intervention.
Abaxx's share price declined 26% on 21 June 2026 following the Viceroy report publication. Trading volume surged to 4.8 million shares, dramatically exceeding its 30-day average volume of 450,000 shares. The sell-off erased approximately CAD 180 million from the company's market capitalization, which stood at CAD 680 million prior to the attack.
Before/After Viceroy Report | 20 June Close | 21 June Close
----------------------------|---------------|--------------
Share Price (CAD) | 24.50 | 18.13
Market Cap (CAD) | 680M | 500M
The stock's decline far exceeded the broader market move, with the S&P/TSX Composite Index finishing down only 0.8% on the same session. Short interest in Abaxx shares had been rising in the weeks preceding the attack, reaching 12% of the float by 14 June 2026, compared to the Canadian market average of approximately 3.5%.
The immediate second-order effect is increased scrutiny on other small-cap Canadian technology and fintech listings. Peers like Dye & Durham Ltd. and Nuvei Corporation saw mild selling pressure, with their shares down 2.1% and 1.8% respectively on 22 June, as investors reassessed regulatory and execution risks across the sector. Companies with complex business models or significant short interest are likely to face heightened volatility.
A significant counter-argument exists that regulatory probes are often lengthy processes that rarely result in immediate sanctions or market stabilization. Historical precedents, such as the manipulation investigation into CannTrust Holdings in 2019, did not prevent substantial shareholder losses despite eventual regulatory action. Market structure analysts note that trading volume patterns from 21 June show concentrated selling in specific time windows, which could support the manipulation thesis but requires detailed regulatory analysis to confirm.
Positioning data indicates that hedge funds with existing short positions added to them aggressively during the decline. Retail investor flow, tracked through brokerage platforms, showed net buying during the sell-off, attempting to capitalize on the perceived discount. This creates a potential battleground stock scenario if Abaxx successfully defends its business model.
The primary catalyst is the response from the Canadian Investment Regulatory Organization (CIRO), which must decide whether to open a formal investigation into Abaxx's claims. No public timeline exists for this decision, but precedents suggest a response typically comes within 10-15 trading days.
Investors should monitor Abaxx's second-quarter earnings release, scheduled for the first week of August 2026, for updated metrics on exchange user growth and transaction volume. Key technical levels for the stock include support at CAD 16.50, its 52-week low from January 2026, and resistance at CAD 22.00, representing the pre-report consolidation zone.
Should CIRO announce a formal investigation, volatility could increase further regardless of the eventual outcome. If Abaxx provides compelling operational data in its upcoming earnings that counters Viceroy's claims, short covering could produce a sharp rebound.
Retail investors holding Abaxx shares face extreme volatility until the regulatory and fundamental questions are resolved. The company's response suggests confidence in its position, but short-term price action will likely remain driven by news flow rather than fundamentals. Retail traders should be aware of the high risk profile inherent in battleground stocks experiencing such public disputes.
Viceroy Research has a mixed track record compared to firms like Citron Research or Muddy Waters. While Viceroy successfully identified fraud at German payment company Wirecard, other campaigns against entities like Tesla and Galaxy Digital produced less definitive results. Their reports typically focus on accounting irregularities and financing concerns rather than pure fraud allegations.
Formal market manipulation investigations by Canadian regulators are relatively rare and difficult to prove. Between 2015 and 2025, the Canadian Securities Administrators commenced only 42 manipulation cases, resulting in 19 convictions or settlements. Most cases involved clear patterns of wash trading or spoofing rather than disputes around research reports, making Abaxx's request an unusual test case.
Abaxx's aggressive legal and regulatory response raises the stakes in a high-risk confrontation that will test market integrity mechanisms.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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